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Wednesday, June 6, 2018

A Couple Thoughts on Apple v. Samsung (part ?100?)

Posted by
Michael Risch

I've done a few interviews about the latest Apple v. Samsung design patent jury verdict, but journalistic space means I only get a couple sentences in. So, I thought I would lay out a couple points I see as important. We'll see if they hold up as predictions.

There's been a lot written about the case, so I won't rehash the epic story. Here's the short version. The design patent law affords the winning plaintiff all of the profits on the infringing article of manufacture. The Supreme Court ruled (reversing about 100 years of opposite practice) that the article of manufacture could be less than the entire accused device for sale. Because the original jury instructions did not consider this, the Court remanded for a determination of what the infringing article of manufacture was in this case (the design patents covered the shape of the phone and the default screen). The Federal Circuit remanded, and the District Court decided that, yes, in fact, the original jury instructions were defective and ordered a retrial of damages.

The District Court adopted the Solicitor General's suggested test to determine what the article of manufacture was, determined that under that test it was a disputed fact question, and sent it to the jury. Apple asked for $1 billion. Samsung asked for $28 million. The jury awarded $533 million, which is more than $100 million more than the damages were before the Supreme Court ruled.

After the trial, one or more jurors stated that the entire phone was the article of manufacture because you can't get the screen without the rest of the phone. I suppose that the half a billion is deducting expenses that Apple didn't want to deduct.

So, here are my points:
1. Samsung is unlikely to win on appeal (despite the hope many seem to be holding). The reason is twofold:

A. Samsung appears to have agreed to the jury instruction on what determines an article of manufacture. Given that fact, the instruction won't be thrown out.

B. Samsung is thus left to argue that, as a matter of law, the whole phone cannot be the article of manufacturer, and no reasonable juror could so find under the test at issue. This is not an unreasonable argument, but it's a difficult one, because:

i. The post-trial jury statements about what happened in the room are inadmissible,

ii. Apple submitted some evidence under the jury instruction that the whole phone can be the article of manufacturer, and all inferences are determined in their favor, and

iii. There are explanations for an amount less than $1 billion that are consistent with the evidence (e.g. the jury assessed additional expenses). This is similar to the first trial, when Apple asked for more money on top of the jury verdict because Apple said it definitively showed more profits and the jury gave only 40% of what it asked for. The District Court said then - we just don't ask how the jury calculated if there was some evidence. I can easily seeing the court doing the same thing here.

2. The jury verdict is not a huge precedent, or a precedent at all. A different jury could have gone a different way on these same facts. Different cases will have different facts. This wasn't even the first design patent damages jury verdict since the Supreme Court ruled. Don't remember any other? See Microsoft v. Corel ($272K awarded, remitted to $74K because there really was insufficient evidence, apparently).* Sarah Burstein has a good post on that case. That's my point - jury verdicts are highly fact intensive. To the extent there are precedents here, they are:

A. The use of this particular jury instruction. To the extent the jury said they were confused, litigants and courts might be wary of it in the future.

B. Whether the District Court and/or Federal Circuit rule that, as a matter of law, a phone infringing these patents can never be the article of manufacture. In Microsoft, the Court went the other way (sort of) and said that the whole software could be the article of manufacture.

If the answer winds up being B - the whole phone can never be the article of manufacture, one wonders (well, I wonder) why this ever went to the jury with the instruction it did. Perhaps the District Court was hoping the jury would get it right and avoid the need for an appeal on this issue. But this is a murky space, where precedent would be helpful if the courts think it warranted. As such, in my view, it may be that the court simply believed that there could be evidence under the jury instruction that would lead to the whole phone being an article of manufacture. And, if that's true, we're back to where we started--Samsung having difficulty on appeal.

The parties are apparently mediating now; perhaps we'll never get an answer to these questions. Or perhaps a final settlement will reveal Samsung's view of what the answer was likely to be.

*Side note: it's pretty sad that the total profits of Corel Home Office products for two years was $74K. I weep for this once mighty franchise and it's view codes functionality.